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PM optimistic about China relationship

Paul Osborne, AAP Senior Political Writer

China's new president Xi Jinping says he wants to take his nation's relationship with Australia to a "new level".

Ms Gillard on Sunday became one of the first world leaders to meet new Chinese president Xi Jinping, who was elevated to power in March.

At the meeting, in which they were joined by Foreign Minister Bob Carr and Trade Minister Craig Emerson, Ms Gillard told the president Australia was committed to building its relationship.

In reply, President Xi used the term taking the links "to a new level", which Ms Gillard said was significant.

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"There's every reason to be very optimistic about the way we can build for the future," she told reporters after the meeting.

On North Korea, the president said China wanted to see calm and restraint.

Human rights, including Tibet, and climate change were also discussed.

She said the president had a "deep understanding" of Australia.

Ms Gillard, who will take her delegation to Shanghai on Monday, also on Sunday addressed the Boao Forum for Asia on the Chinese resort island of Hainan, urging closer co-operation on defence and economic matters to ensure the Asian region remains peaceful and stable.

As North Korea continued its provocative action, the prime minister warned: "Any aggression is a threat to the interests of every country in the region."

On the sidelines of the conference, 23 business chiefs from the two countries held the inaugural China-Australia Senior Business Leaders' Forum.

Forum co-founder Andrew Forrest, chairman of Fortescue Metals, said it would become a permanent event and working groups would be set up to look at financial services and investment climate.

As the prime minister met with President Xi, her partner Tim Mathieson, met with China's new first lady, Peng Liyuan.

Madame Peng, a former popular singer who has become noted globally for her fashion style, sought the meeting because of her interest in tackling smoking rates.

Mr Mathieson, a men's health advocate, told the first lady about Australia's policy of plain packaging of cigarettes.

Earlier President Xi, in his first address to a major international forum, said he wanted his nation to focus on peace, stability and prosperity.

He said China was committed to ensuring its own growth and development benefited other parts of the world.

"The road ahead remains a bumpy and twisted one," he said.

"Asia needs to transform and upgrade its development model in keeping with the trend of the times."

While not directly referring to North Korea, President Xi said China was committed to upholding peace through dialogue and peaceful negotiation.

"No one should be allowed to throw a region or even the whole world into chaos for selfish gain," he said via a translator.

Senator Carr said reports of formal war preparations in North Korea were "mischief making", but that did not diminish Australia's concerns.

"Another missile test is certainly more likely than an attack on the United States," Senator Carr told ABC television.

Contingency plans are in place for Australians in South Korea should combat occur, and advice is in place to reconsider the need to travel to North Korea.

He talked down the prospects of a deal being struck soon on formal annual leader talks between Australia and China, saying it was too early in the life of the new leadership.